Portability Provider Reaches Account Transfer Milestones

The Retirement Clearinghouse LLC, a provider of portability and consolidation services for defined contribution plans, announced Tuesday that it has consolidated more than 525,000 retirement savings accounts, comprising more than $20 billion in assets, into existing 401(k) or individual retirement accounts over the past 16 years.

The new milestone doubled the $10 billion in plan-to-plan consolidations the firm reported in July 2021.

According to the announcement, the average account balance in a large-balance, plan-driven consolidation is $53,293, while the average balance in a small-balance automatic rollover-driven consolidation is $2,794. RCH reported that one of the “most significant relationships” contributing to the $20 billion mark has been assisted roll-ins for the Federal Thrift Savings Plan, established via its partnership with Alight Solutions. The Thrift Savings Plan, established by Congress in 1986, is a DC plan for federal employees and members of the uniformed services.

Large-balance consolidations drove most of the $20 billion, but automatic rollover-driven consolidations are increasing in number, especially electronically. The fastest-growing segment of electronic consolidation was handled by the automatic portability service of industry consortium Portability Services Network—founded by the Retirement Clearinghouse. As of September 30, nearly 21,000 plan sponsors elected to adopt automatic portability, transferring a participant’s involuntary distribution from an IRA or a prior employer’s 401(k) into an active account, as permitted by a provision of the SECURE 2.0 Act of 2022.

“Innovative technology, and close cooperation with the private and public sectors, have propelled us into the unique position of being able to boost the financial well-being of Americans and their families across the country,” said Spencer Williams, the Retirement Clearinghouse’s founder, president and CEO, in a statement. “Our platform serves as the digital super-highway for assets that move across the U.S. retirement system.”

The PSN is a collaboration between the Retirement Clearinghouse and six major recordkeepers—Alight Solutions, Vanguard, Fidelity Investments, Empower Retirement, TIAA and Principal Financial Group—that uses RCH’s technology to enable automatic transfers of small, “stranded” 401(k) accounts between employers’ plans, thereby reducing cash-outs and consolidating savings. The PSN includes retirement plan recordkeepers representing approximately 82 million employees across more than 185,000 plans, according to the RCH, which reflects the most recent data available.